On April 15th, according to foreign media reports, Japan Tobacco International (JTI) will invest 300 billion yen (approximately $2.25 billion) over the next three years to promote its heat-not-burn product, Ploom X. Of this amount, 200 billion yen (approximately $1.5 billion) will be used for markets outside of Japan.
Masamichi Terabatake, President of JTI, stated in an interview that the majority of this investment will be used as the initial cost for promoting entry into new markets.
Masamichi Terabatake, the President of JTI | Image source: asia.nikkei
Terabatake also stated that due to a shortage of semiconductors and inadequate heating tobacco equipment, JTI was unable to make investments last year. However, this year JTI's purchasing will return to normal and compared to last year, they can ensure a supply of more than double that of Japan.
The report states that JTI has not disclosed its investment in heated tobacco products from 2020 to 2022, but it appears that this investment will exceed the spending of those three years.
At present, JTI is only selling Ploom X in Japan and the United Kingdom, with plans to launch it in Italy this month.
JT International is planning to launch Ploom X in over 10 countries this year and aims to expand to at least 20 countries by the end of 2024.
According to previous reports, in October 2022, JTI and Altria established a joint venture company with the goal of obtaining FDA's PMTA approval by 2025, to enable their products to be legally sold in the US market.
According to reports, JTI's heated tobacco division is currently experiencing losses due to long-term investments. However, JTI anticipates that the division will turn a profit by 2028 due to overseas growth.
JTI also plans to invest in research and development to explore the development of second and third-generation Ploom X products.
Terabatake stated that since heating tobacco is still in its early stages, this improvement may continue for several generations.
JTI has announced that global cigarette sales were down by 1.5% last year. However, heated tobacco has made headway: according to research firm Euromonitor International, the global market grew by 17% last year, reaching $33.4 billion.
References:
Japan Tobacco is set to expand its market overseas by investing $2bn in its heated smoking stick products. The company aims to meet the increasing global demand for alternatives to traditional cigarettes.
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